Guest: Jason Gendel
Topics: Party City, retail

Transcript:

Chris Ressa 0:01
This is retail retold the story of how that store ended up in your neighborhood. I’m your host, Chris ReSSA. And I invite you to join my conversation with some of the retail industry’s biggest influencers. This podcast is brought to you by DLC management.

Welcome to retail retold everyone. Today I am joined by an old friend Jason candle. Jason is the vice president of real estate for Party City. He has been in the retail real estate industry for over 15 years. Now he oversees all the real estate at Party City, not just the retail, but their office, industrial and anything that’s to do with real estate. I’m excited for him to be on the show. Welcome, Jason.

Jason Gendel 0:46
Thanks, Chris. Thanks for having me.

Ressa 0:48
So, Jason, tell us a little bit more about you who you are and your story.

Gendel 0:54
Sure. So as Chris said, I’ve been in the real estate industry for about 15 years. I started out on the brokerage side, actually, my wife is in the same industry and she took me out to Vegas and I got a job because I walked up to the Chairman of the Board of Cushman and Wakefield at the time, and started chatting him up. And he offered me my first job in real estate. So I worked for Cushman for a couple of years and then decided to jump on to the retail side.

I joined Party City, I believe it was 2011. I

was with them for three or four years, then decided to take my skills to Avenue stores, which was a women’s plus size clothing chain. And about two years ago, Party City recruited me back to help run the real estate department over here.

Ressa 1:54
Interesting year we had in 2020. And it was up and down a little bit Party City. But you guys have made an interesting comeback. The stock has soared since the low point, you had a great q3 Quarter, you had comps up. And they were up. I think you said before the show where that was the one of the largest comps you’ve had.

Gendel 2:17
Yeah, and in about nine years. So as everyone knows, with the onset of COVID. In mid March, last year, we we closed all our stores for approximately two months. And which was really detrimental obviously to to us at the time, but we felt it was very important for our employees and our customers their safety first. And so the decision was made. And we started to focus and figure out how we were going to reopen and our plan focused on buy online pick up in store, buy online curbside pickup, and we’ve really reinvented our, our whole customer focused customer centric mentality to accommodate the changing retail environment at that time. Through COVID, you know, we there has been a lot of change. And we’re really, we opened our stores, back mostly most of them were opened up in May again, and we were ready to go, we found that people still wanted to go out and party and habits were changing. And maybe if you’re going to have your daughter sweet 16 at a restaurant or something like that, but you know, due to COVID, you couldn’t you were going to do it at your house with your close relatives. So we found that balloons and party goods were still in high demand. And our day to day business was strong. And the balloon business just took off at that point. So through the summer, business was was good. And then, you know, as we kept going into the fall, we had Halloween come on us which is is a big part of our business today. And, you know, everyone was a little nervous about Halloween, and you know, still gatherings and getting together but Halloween worked out fine for us as well. So now on you know, we’re I wouldn’t say we’re on the other side of COVID. But as we work through the vaccinations and things like that now, you know, we have a plan, and we’re looking towards the future. We’re definitely very customer focused right now. And that is really being an ingrained in our head across the whole you know, all the employees of Barney said

Ressa 4:35
it’s a it’s a good comeback story in the making. It’s still coming back, but it’s a good comeback story in the making. What does that mean to be customer focused? I love hearing that but what does that mean at Party City?

Gendel 4:48
So for us right now, you know we have a new next gen concept with which really pushes that along. It eliminates for us we’re eliminating about 6000 skews. So Norm No Party City in the past would have 26,000 different items in there, we’re cutting that down to a more manageable number. We’re eliminating some of our higher fixtures throughout the store to make shopping easier, our merchandising is different. We’re we’re Manning our stores with a new a number of more, putting more people into the stores and employees, and really focus on what their needs are throughout. So we can really supply them with all the party goods that they want.

Ressa 5:31
That I think that’s great. I think being customer focused, is always a good thing. But really having the high intensity on customer focus that you all have is going to pay dividends in the long run. You mentioned this next gen store and some of the things I know what’s important to you all is that a new stores that are remodeled tell us a little bit more about the next gen store.

Gendel 5:55
So the next gen concept, it could vary in size from 9000 square feet up to 20,000 square feet. Because we do we are doing this concept in new stores, we’re doing it for real close. And we’re also remodeling a number of stores. Throughout the chain. We’ve already remodeled close to 20 new stores. And we’re in the process we’re hoping to have probably 75 Next Gen stores in our chain throughout 21. That’s going to be a major focus. Throughout throughout the whole, our whole business right now is really focusing on balloons focusing on our customers, really. And what we did too is we cut our day to day prices on a number of items, which is really, really brought more traffic into

Ressa 6:47
the stores. That that’s interesting. One of the things you said before was you cut back on the skews, which to me is interesting, because I remember a few years ago, you all the goal I remember having a conversation with a goal was you wanted every product that Party City made or had their hands on in a store. And that’s obviously changed. And I’ve heard this a lot from other retailers where they’re really focused on managing that inventory. What is the purpose for less items in the store, I think just

Gendel 7:19
a better shopping experience. At the end of the day, if you have 12, Red 12 Different color red plates, you know, all different shades, you really need 12 Different shades or red plates. So you know cut it down to half a dozen things like that. I think overall, the shopping experience is just a lot better. It’s easier people want to get in and out today, I think convenience is so important, especially when you’re competing with your online sales today. You know, we’re trying to make it as convenient as possible, you can pick it up, you know, you don’t even have to come in to the stores. We’re even working on same day delivery right now throughout the chain. So that’s really, you know, trying to make every convenience is really comes down to convenience.

Ressa 8:03
You said a word that I really love, which is this buy online pick up in store and buy online, pick up, you know curbside pickup, because I think this really can solve the last mile challenge that so many ecommerce and brick and mortar retailers have been trying to solve it is a challenge to send 4000 different items to 4000 different households, the price that people want to pay and retailers still profit. And yet the consumer wants convenience. We have these things that could really solve this that are very close to the consumer called stores. And how do we make that convenient for the consumer and we can you can buy it online, have that digital experience and pick it up at the store whenever you want versus waiting around for delivery even same day sometimes, if I need something, you know when I need it. Now I don’t want to wait. Right? No one’s

Gendel 9:01
patient anymore. I think as I get older, obviously I’ve gotten less patient but yeah, I mean, I think it’s not an option today. It’s something you have to have if you want to be successful.

Ressa 9:13
Do you guys have any numbers around how many people have used by my pickup in store for you?

Gendel 9:20
I don’t have the numbers off the my off the top of my head but I do know that percentage is not only shot up dramatically, but it still continues to increase every month as we look at it so and we do have an online presence as well you know that? We’ve always had that. But I think the pickup in store side has really really just blown that up and it’s just we’re expecting it to continue to increase.

Ressa 9:46
Very cool. This next gen store that you guys are bringing to the market is the plan to eventually turn every store in the fleet you have over 800 is the plan to turn them all into Next Gen stores.

Gendel 10:03
So I think at a high level, you know, the plan would be to change a majority of them over to next gen. I mean, I think we’re still in the testing phase. So we don’t want to get too far ahead of ourselves. But we are teeing up, like I said, you know, set, hopefully to have 75, at least of these next gen stores open and operating by the end of 21. So that we’ll be able to kind of take a look at everything, evaluate and then make and then make that decision. We just don’t want to get too far ahead of ourselves. But so far, it’s been great. And, you know, we’ve done surveys with customers, and they think it’s fantastic. So we’re continuing on that path. You have 20 open today. So I think there’s, there’s there’s two markets, we did Kansas City, and we did Las Vegas, and the other ones that we’ll be opening up over the next month or two will get us up to about 20 to start.

Ressa 11:02
So if one of the listeners wants to check one out the people in Las Vegas, you can go to Las Vegas in Kansas City, and you can check out one of the next gen stores.

Gendel 11:09
Absolutely. Absolutely.

Ressa 11:11
Very cool. All right. I think that’s a good, a good summary. Anything else that going on at Party City that you think everyone would want to hear that we should talk about? Hmm,

Gendel 11:24
no, I really feel as if, you know, the pandemic has been tough for everybody. But as a company, we’ve really pulled together and become very focused as to what our plan is and what, what we need to do to be successful. And that’s what we’re doing right now. So you know, we are looking for new stores. We’re looking for real close. We’re doing remodels. So we’re very active in the market right now. And if there was anything that anybody had to offer, as far as opportunities, certainly, you know, send it over to us.

Ressa 12:02
That’s great. And I think one other thing that’s really important note, you closed permanently from COVID. Very few if any stores are coming out of it. Right. So I think that is that’s something that a lot of retailers can’t say. So I think that’s really cool.

Gendel 12:18
Yeah, the demand and the demand is still there. I mean, it’s definitely they are it’s changing, and it’s evolving, but we’re still seeing demand. And, you know, as we talked about balloons to over the last couple of months have been a real strong driver of sales. And I’m sure will continue to be and we’re looking forward to you know, strong Halloween next year to Halloween is on a Sunday next year. So it’s still very good. And so over the weekend, and you know, so we’re looking for a strong 21

Ressa 12:47
on a on a Sunday Halloween will people go How will people go trick or treating on Saturday?

Gendel 12:52
They will they will so obviously Saturday’s Very good. Sunday’s good Friday’s good. You really your worst two days are like Tuesday, Wednesday cuz some people break it up. And then they go the first the weekend before and some go after. But the parties and things. I think you’ll see a lot of adults out partying for a Sunday Halloween on Saturday night,

Ressa 13:11
for sure. Got it. That makes sense to me. All right. I want to pivot to the next part of our show. Because you You made me laugh before the show. I’m excited for you to tell everyone this. You all recently opened a store in Alaska in Anchorage, Alaska. And so why don’t you tell everybody about that, that that store opening.

Gendel 13:35
So about a year ago, we had been looking at the anchorage market for two years about and about a year and a year ago, we began to pull the trigger on it. So I had to go up to Alaska. It was January. Last year it was January. So in Alaska, it is dark from 10. It’s only light from 10am to 2:30pm. So when I landed at 9am in the morning, it was dark. Then I went to my hotel room. By the time I got out of there, it was dark. And then so I went back to the room I went to sleep I woke up in the morning, and it was still dark. I drove to the site I waited for the sun to come up, evaluated the site drove the market and then by 230 Again, it was just pitch black out went back to my hotel room. I slept a little and then I had to take the red eye home so I was only in actual sunlight for I would say two to three hours over a two day period that it was actually light so it was an interesting adventure but wow, we ended up opening the store it’s doing very well and you know it’s a very it’s an interesting market up there. When did it open over the summer this past summer so you know it had COVID There was hit a little bit later but the store is doing well. We Actually backfill the old bed bath and beyond and it’s so it’s a 25,000 foot store in North Anchorage. So, you know, we’re we’re thrilled to be up in the markets. I feel like there’s definitely growth up there. And we may be back for a southern southern anchorage store soon as well. Wow.

Ressa 15:20
Did Is there any logistics challenges getting product up there?

Gendel 15:24
There actually is. So we started to ship our stuff out there. And when COVID hit, we had to stop it. And it was on a barge and I learned I learned the difference between a ship and a barge. And so that was something differentiated shipping a barge, the one is like, it doesn’t put anything underneath it’s flat on it, so stuff can actually fall off of it. So I’m, so we have a logistics person that handles that because, you know, remembering that Party City and amscope Party City holdings in amscan. As part of that, we’re the largest manufacturer of party goods in the world. So we were pretty well equipped to handle shipping it up there. But when COVID hit and everything stopped, everything got sent back to where we started. So we actually had to deal with kind of twice. And it became quite interesting to find some of our stuff at a shipyard out on the West Coast. It was it was interesting. Wow.

Ressa 16:19
Yeah. The That is crazy things happened during this pandemic. Yeah. Megan up, yeah, product lost on a ship and all types of crazy stuff. When did you all decide that you wanted to open in Alaska? I think

Gendel 16:38
they, it was being vetted before I even came back to Party City. So it’s been a couple of years. And then the right opportunity came along for us. So we jumped on it right away. It’s just, it’s a really, it’s an interesting market. And for us what we would consider that whitespace so, you know, we weren’t cannibalizing ourselves in any way, it was all new customers, all new, you know, a whole new all new markets there. So I think that’s really what drove the interest at the end of the day to kind of look at these whitespace opportunities, and where you’re not going to kind of eat away at your own existing business and, and open up new stores in new areas of the country. You have stores in Canada now so Party City does not have any stores in Canada anymore. We’re not connected to that. At one point, you know, we were doing some Halloween stores and things out there but as of right now that we do not have anything to do with parties and there is no Party City Canada stores.

Ressa 17:42
When you went to Anchorage was that the first time you were there? It was Wow.

Gendel 17:49
And I thought it was gonna be like a fun awesome trip, I get to go in August and it’ll be a go fishing or do whatever. But it turned out just to be like a 48 hour trip of darkness. And it was it was it was what it was but it was all work. But I would definitely go back there to try to you know, enjoy myself a little bit.

Ressa 18:11
anything unique about doing a real estate deal up there versus other parts in the United States or was it pretty similar to everywhere else? It was,

Gendel 18:19
it was very similar the deal was structured the same way. You know, the build out the landlord handled? Nothing, nothing really that extraordinary honestly,

Ressa 18:31
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Really cool. I want to take us to the last part of the show called retail wisdom. You’ve got so much wisdom to drop. So are you ready? I’m ready. All right. Question one. What extinct retailer Do you wish would come back from the dead? I think that

Gendel 20:35
looking back on this, and we talked about this a little before, because I think that if you don’t evolve, you’re gonna be extinct. So you know, I think it’s more for me local restaurants right now in my area there of which there are a lot of them struggling and now they’ve been closed for close to six months. I think overall, it’s really just the restaurant industry in general, I wouldn’t say anyone in particular, but that’s where I really, I miss. I miss that. And I do feel really badly about what they’re going through and how their business had been been affected by the current COVID situation. Your family’s favorite restaurant? I think it’s forte and called that have been there that a good restaurant that you’re always going to so

Ressa 21:22
yeah, they’re they have multiple they have another location right in Randolph,

Gendel 21:26
New Jersey, have been great. I mean, there’s plenty. There’s a lot of restaurants and some are doing better than others. But a couple of the ones that we really liked are struggling, if not closed at this point. And just be interesting to see if they can make a comeback. Yeah, for

Ressa 21:41
sure. All right. Question two, what product what is the last product over $20 that you bought in a store?

Gendel 21:49
So I would probably say first of all, probably wasn’t for me. It was probably my daughter’s. And I think it was a pair of sneakers. I think I was at Dick’s. And we bought a couple pairs of sneakers for her. She needed to try it on. So that seemed to be an you know, just easy to go there instead of purchasing it online. Other than that, I think the other thing that I bought, and I’m not making this up, I think it was balloons. I really think it was I think it was balloons for my daughter’s graduation back months ago. And we went in but other than that I really have been on to tell you the truth, just working through things right now. You know, just but overall, I think the most recent is definitely sneakers. All right. All right. What’s the most what’s what have you bought over $20?

Ressa 22:39
What have I bought over $20 I have bought a ton of stuff from The Container Store lately. So for Christmas, one of my Christmas gifts to my wife was shoot, my wife likes everything, like organized, everything has a place. And when you have some young kids, you start to accumulate things quickly. And so I got my wife, a professional organizer for Christmas, that was the gift, the biggest. So this woman you pay and she comes for a certain amount of days we did and went through like every room and gave some organizational ideas and tips and all this stuff. And with that, you’re gonna need some products and systems and whatnot. And I’m still purchasing them. I’ve got a text that says we’re getting these shelves that I just was made aware of today. So

Gendel 23:29
there you go. I know that I think it’s the right time to do it. You’re stealing everyone’s stuck at home. So your minds will try to organize things. I think it’s a great idea.

Ressa 23:37
Last question, by person, Jason, we’re at Target. And I lost you. What aisle would I find you in?

Gendel 23:47
Well, I would say I don’t know if you and I are in Target together. I know if that’s happening. I was in there with my daughter’s I think I find myself more often than not in the cosmetics aisle. Wow. I think that’s where I’ve actually had my daughters test out stuff on me in the past. And you know, and they they’re very into that. I mean, that’s such a big business today. I would I spend a lot of time there then I probably go get something from my dog. And then and then maybe make it over to the electronics but I think it’s either in the in the pets pet area, or most likely it’s cosmetics.

Ressa 24:27
Wow. So I have a three year old daughter and what you’re telling me as I’m gonna end up having being a makeup artist or I’m gonna have makeup done on me as a test is what you’re telling me. That’s what’s happening. You’re gonna be

Gendel 24:40
at Alta you’re gonna be at Sephora. You’re gonna you’re gonna be all over. Absolutely. There’s no question.

Ressa 24:46
Got it. Very cool. Well, listen, Jason, this was great. Thanks for coming on. I really appreciate it. You were awesome. And yeah, man, thank you for doing this. I

Gendel 24:58
appreciate you having me Chris. You

Ressa 25:00
Thank you for listening to retail retold. If you want to share a story about a retail real estate deal that you were a part of on our show. Please reach out to us at retail retold at DLC mgmt.com This show highlights the stories behind the deals from all perspectives. So it doesn’t matter if you are a retailer, broker, entrepreneur, architect or an attorney. Also, don’t forget to subscribe to retail retold so you don’t miss out on next Thursday’s episode